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DoorDash went public on Friday, which means we'll have at least one more Unicorn IPO by 2020. To get an overview of the numbers I wrote this, Danny set out who will benefit from the deal, and I read up on the business impact of COVID-19.
I'm bringing up all of this because there's one more COVID-19 unicorn that we expect to hit the public in no time: Airbnb.
When Airbnb went public in August, it seemed like a solid plan. It was widely reported that the company was on an upswing due to its COVID lull, public markets were hot for growth and tech stocks, and the number of pandemics in the US declined from their summer highs. It looked great for Airbnb to end the third quarter, put the new numbers on the public S-1 and laugh to the bank after showing investors that even a global depression was in the pandemic and in the travel industry could not stop this.
And yet. The US and the world are in the midst of the worst COVID-19 surge ever, and consumer spending is falling right before we get the company's S-1. November is less profitable for an Airbnb recovery than August or September. When Airbnb files – next week, as the Scuttlebutt indicates, so get ready – we won't look at the numbers until the third quarter.
That's practically the same timeframe for a record that the Cardify folks sent and that I worked through. According to the company, which collects real-time consumer spending data, here is how well Airbnb has recovered from its initial recession in spending on pandemic accommodation ahead of its larger industry:
Impressive, isn't it? Unfortunately for Airbnb, the initial boom in demand from late June to July has diminished over time.
Airbnb spending data from July 2020 to the end of October, the first month of the fourth quarter, compared to the same period in 2019:
So decline, but it's still an encouraging record for the company. I didn't expect Airbnb spending – admittedly through third parties – to be that high.
The trend of people renting a house for a month seems to have diminished a bit if you include that in your mental math regarding Airbnb income from the charts above. Cardify informed TechCrunch that the average booking sizes normalized after a high of around + 70% in the period from March to April and are around 30% higher year-on-year.
The charts show that there is a weakness in October, but it appears to be at least partially seasonal given the 2019 line. Therefore, I do not want to overwrite increasing COVID cases as a cause. However, the drooping line was reflected in similar SimilarWeb data that was also shared with The Exchange. The dataset covered global booking volume for accommodations for a range of travel services, including Airbnb. Data tracking the US market showed that a rebound in bookings through September, which made up some ground from March lows, was undercut by declines in October. The recovery in bookings in Europe peaked in July and has been declining since then. Asian volume is creeping in higher but is down sharply from previous levels.
It was a mixed picture, but with Airbnb performing better than its broader industry on Cardify, the aggregated data could make us more pessimistic than we otherwise need to be. We'll see what the actual numbers are shortly, but I couldn't help but let you know what I read. Off to the S-1!
Before DoorDash was filed, we wanted to talk about Brex in this post Airbnb area today. But since we've been particularly busy, expect these notes to arrive at The Exchange early next week.
The week was very busy with revenue, so I collected some notes from calls to select companies after they were reported. We apologize to everyone's favorite news agency, but we're limited on space.
Appian crushed profit expectations. What drove the growth of low-code application development services? According to CEO Matt Calkins, this wasn't a single thing. Instead, the company's performance has been determined by a long ramp, which he said, although he also noted that the concept of low-code has reached public awareness at new, higher levels in recent quarters.
Why? The chaos of the year brought companies into new patterns faster than expected. Chalk this result until accelerating digital transformation is real, which is good news for startups. (More information about Appian and the low-code area can be found here.)
Alteryx gave The Exchange a profit first and introduced both new former CEO Dean Stoecker and new CEO Mark Anderson to chat about the results. The company has put down expectations for the third quarter, but its guidance for the fourth quarter did not delight investors. What was going on? Anderson argued that ARR growth, rather than GAAP revenue projections, is the most transparent and straightforward view of an expanding software company to paraphrase its thinking. You can't ignore revenue, he said, but given the nuances of counting revenue, you should pay attention to ARR.
Alteryx has a solid ARR target for 2021. We'll see how investors see its fourth quarter results and if they align their thinking with that of the new CEO. Former Alteryx CEO is optimistic, saying that over time, the market will recognize that analytics is the epicenter of digital transformation. And his company will be there for sale with code.
Earlier this week, I asked a number of VCs about the software venture capital market after Monday's sharp sell-off, and my question about what could happen to public and private software companies if other stocks suddenly became more attractive – strong vaccine news on Monday got later in the course of the Overwhelmed by surging falls this week, Zoom lost billions in value on Monday as investors fled.
A number of responses were late, but I wanted to share them anyway as they were more bullish than I expected. According to Laela Sturdy, a general partner at Alphabet Capital G."Private software investors are unlikely to change their investment patterns significantly because of fluctuations in the public market," adding later that "changes in the public market would have to be very extreme – like 30 percent or more – to affect growth Stage reviews. "
The link between public valuations and trading patterns and the use of private capital is there, but how closely the two are linked depends on what is happening at any given time, and it seems that the craze for software among private investors is enduring right now.
Sturdy explained why this might be so: “Long-term mundane trends in terms of cloud adoption, automation and AI, data, security, fintech infrastructure, and the continued rapid acceleration of digital transformation will help tech companies establish their darling status of growth investors in both the private and public markets. "
Miscellaneous and miscellaneous
And finally, the rest of the stuff I couldn't get this week. Let's go:
Chatted with Cambridge Innovation Capital, a decent venture capital firm based out of Cambridge in the UK – not Cambridge on the American east coast. There's more to be said here, but the good news is that innovation hubs are really maturing into startup factories around the world.
I got my hands on an early copy of an Allocate-compiled LP survey. I think it comes out on Monday, but it says that "only 20% of respondents (LP) said COVID slowed their investing" which explains all of the funds we've seen in the past few months.
Do you remember the look we took on the performance of various startups in the third quarter? That was fun. Anyway, JotForm, a no-code online form creator, told The Exchange that its revenue is up 50% from 2019 results, that its corporate customer base is up 620% and that it is projected to "end 100,000" total paid users will reach year. "Neat!